Originally Posted by Ankh
So, plans with "0$ phones", tabs, purchase plans, discounts... it all amounts to this: service provider can get away with requirement for "sim only" customer to pay a premium, so that plans with locked-in devices are offered at par or cheaper. If they were pushed by the competition, that desire to force lock-in on customers would go away. Better a customer that is not locked in than no customer at all.
But $0 phones are never no cost since you have to have a plan were you pay for much more voice calls than you use. And that money is of course used to pay for the phone.
Then there is the issue if the phone have modified firmware. In the US as I understand it it is common that tethering is disabled in the phones that you get very cheaply with a plan. Also the plans do not allow tethering.
This is totally different in Europe were it is much more common to buy phones and plans seperately. But that means that the phone will be much more expensive than the perceived phone price in the US and a transformation to paying so much for the phone is very hard to do. Google failed when they tried it a couple of years ago but maybe they will succeed now with the Nexus 4.